What is the point of the Latin Empire if they are going to have only Athens after a couple of turns?
Simply realism.
Also, in my game, so far, The Latin Empire loses Costantinople, but keeps his other cities and has (a few) chances.
The Byzantines start with a single one too - and in my opinion in that region a civ has to be destroyed or become vassal of another one, considering how packed the area is.
- I wanted to give to the Papal State, Bologna, or some other city of the Marca Trevigiana, but there isnt really room for any other one.
However the Papal State performs well in the games I playtested.
Likewise I do not think that Rhodes would have enough room to strive and Cyprus - that you mentioned - should have pledged allegiance to Frederick II and the HRE - as a crusader state under the Lusignan dynasty - so I do not feel like passing it to direct Papal control.
I'll check with Rhodes though but I cant recall if it was still under the Byzantines.
Thanks for the suggestion though!